One of the (many) economic paradoxes in Iraq today is the existence of considerable poverty in a country that was once, and could still become, among the most prosperous in the region. Practically the only Arab state rich in both oil and water, Iraq’s de-development in the last few decades means that today many of its inhabitants are poor and malnourished. Though pockets of stability exist where life is less harsh (including, for example, Kurdistan) the overall situation in Iraq remains precarious and general economic conditions are tough.
The country witnessed a dramatic decline of living standards since the war with Iran (1980-8), which cost Iraq $450 billion (much of it in weapons) and the lives of 800,000 of its citizens. After the first Gulf war in 1991, annual per capita gross domestic product was at a mere $250, on par with the poorest countries in the region. That “recovered” to $600 in 2002, but fell to $400 in 2003 after the United States invaded. Since then, Iraq’s economy has been growing, but the country still has far to go to achieve prosperity, with unemployment at more than 25 percent. By contrast, income per inhabitant in the 1970s was several thousand dollars, and the percentage of those out of work was in the low single digits.
This precarious economic situation has brought about practical problems, including in the area of nutrition, with roughly 4 million Iraqis, or 15 percent of the population, being food-insecure today. The average daily calorie intake per person has dropped to about 2,000, compared to an acceptable level of around 2,400.
This is especially ironic in a country like Iraq, which before and during the oil era saw significant agricultural activity, with agriculture currently employing more than a quarter of the labor force, though contributing only 6 percent to the economy. Iraq’s major crops are wheat and barley, but for these as in others, productivity has been steadily declining over the last couple of decades. Cereal yield today is estimated at around 900 kilograms per hectare compared, for example, to neighboring Iran’s 2,300.
The reasons for this malaise are many. First, Iraq’s lack of fundamental prerequisites for market interaction, like secure property rights and freedom of movement, are poor. Second, even when these basic factors are assured, as in the Kurdish region, inadequate transport and storage means crops cannot be brought to market in a timely or otherwise efficient manner. For example, an agricultural official I talked to recently in Sulaymaniyah, near Kurdistan’s mountains, complained that the abundant grape crop of the surrounding hilly regions went to waste due to inadequate roads and cooling facilities. Third, the physical capital stock of Iraqi agriculture consists mainly of outdated Soviet-era machines that break down often and for which spare parts are rare. Finally, drought and frequent sandstorms over the past few years have worsened things.
Iraq cannot easily rescue its agricultural sector under present conditions. Yet, conflict apart, agriculture in many countries around the region is suffering. Though Iraq and other states in the region may not have been what the Group of Eight countries had in mind at their recent summit in Italy, they have approved $20 billion in aid over three years to help poor farmers in developing states grow and sell more food. The initiative aims to cut the number of malnourished people globally by helping local farmers produce more. The investment program would help farmers get seeds and fertilizer, and engage in effective marketing. Not unlike their counterparts in Iraq, these farmers have the potential to become prosperous, while solving the problems of hunger of those around them.
The recent statements by the G-8 on nutrition signal an encouraging shift of policy toward helping the poor and hungry to produce their own food. Aid for agriculture is falling globally, relative to support for other sectors: the proportion of development aid destined for agriculture in poor countries has fallen to about 4 percent today from 17 percent in the 1970s. Given the severity of the problem, $20 billion is a drop in the ocean, but at least the G-8’s latest pledge sounds more concrete a commitment than past aid declarations that went unmet.
Hopefully this money will materialize: much of it was pledged at the Rome Food Summit in June of last year, but in reality only a fraction has been disbursed. Regardless, agriculture is assuming more importance in the global agenda; hopefully this will also be the case over the next few years of Iraq’s development.
Riad Al Khouri is Senior Associate Consultant at the William Davidson Institute of the University of Michigan in Ann Arbor, and Dean of the Business School at the Lebanese French University in Erbil
